The Legislative Cycle--Payment Limitation III (Wives)

In my previous post I left off at defining a "person".

Assume that I'm one of Garrison Keillor's Norwegian bachelor farmers. My operation is big enough that I could get $1,000,000 worth of farm payments a crop year. By "operation" I mean I own the land and equipment, provide the operating capital, do all the managing, hire enough day labor to do the work, and take 100 percent of the risk of growing crops. That is, I'm the farmer everyone thinks of when you say "farmer" (except that I may have a bigger operation than one expects). There's no question I'm a "person"--so once Bush's proposal is enacted I can earn $250K, but that's it.

What does that mean? It means that $750K that I can't receive is "left on the table" as we say. It means that any sharp lawyer or experienced bureaucrat who can figure out the rules can earn easy money. (If a lawyer figures out how I can get another $250K a year, surely he could ask for a third. And yes, if lawyers chase ambulances, gin up class action lawsuits, and create tax shelters, they also get into payment limitations.)

So I go to Sharpie Sam for advice. He tells me that Ole Olesen died a year ago, leaving his 10 acre farm to his wife. It's a small operation, but if I marry her I can probably claim that she's a "person" too, thus getting another $250 K.

Note: my description is based on my memory of the rules as of the mid-90's, though there hasn't been much change since. Over the last 35 years the rule on wives has changed, from considering husband and wife as one person, to allowing them to be 2 persons if both had separate operations before marriage.

The Legislative Cycle--Payment Limitation--II

My previous post covered the creation of the idea of changing payment limitation rules and estimating the changes. At some point, perhaps, some of my former co-workers were consulted about the idea, or at least informed.

At this point the change has been included in presentations to OMB, approved, included in the budget, and now presented to Congress and the country. Now there become multiple threads to the story, with action occuring in the House Ag and Senate Ag committees, as well as in USDA with the attorneys in the Office of General Counsel and bureaucrats in FSA.

1 The most important is the political maneuvering over whether to support Bush's plan. The strength of the opposition on payment limitation appears to be in the Senate, because of the key positions of the senators from the south (bipartisan--Blanche Lincoln is part owner of a big rice plantation)

2 The lower-level action is among lawyers and bureaucrats. They have to draft legislative language changing the existing provisions of law. Current law dates back to 1985, although payment limitations have been in effect since 1970. 7 U.S.C. 1308 and 7 U.S.C. 1308-1 contain the existing law. This may be the point at which people start really to think through the idea. (Though it may have started earlier when the economists had to come up with a savings number.)

At this point the idea may be just: $250K per person, and no 2-entity rule (7 U.S.C. 1308-1(a)(1)). (I'll try to explain 2-entity rule as I go.) So the first crack at drafting might say just that:

"The total amount of the following gains and payments that a person may receive during a crop year may not exceed $250,000."

Note the draft has introduced complications--the $250K is a cap on payments from different programs, so there needs to be a list of what's included. Because current law provides individual limitations at lower levels for some of the programs, Congress will also have to decide whether to keep those limits. The second complication is the mention of "crop year"--that's a term that has to be defined. Fortunately it already is, based on past history. "Crop year" can lay a trap for the unwary and statistically naive. Bureaucracies also deal with calendar years and fiscal years and data can be reported based on any of them. The third complication is the definition of the term "person"--to which many more bytes will be devoted.

The Legislative Cycle--Payment Limitation--I

President Bush has proposed, in his budget, to change the payment limitation rules applicable to farm programs. This is an area I used to know pretty well, so I thought I'd blog on the steps involved in getting the idea implemented.

My guess is that OMB and USDA officials got together to discuss possible ways to save money (i.e., OMB told USDA to cut X billion dollars over Y years and USDA scurried around to come up with ideas.) Once someone, probably at the assistant secretary level had come up with the idea of changing payment limitation rules, they probably talked to the FSA administrator who talked to his economists. They did their crystal ball work and came up with a savings estimate.

The savings estimate would be very soft. Conceptually this is like changing tax law--the changes change behavior. It's like figuring you'll save money by making your own coffee instead of buying Starbucks. After a year you may find you've drunk lots more coffee and had to see the doctor for jumpy nerves.

To see the official explanation of current payment limitation and eligibility rules, see the PDF document here

The New York Times > Health > When Torment Is Baby's Destiny, Euthanasia Is Defended

Humans are not the only tool making species, birds and primates make tools as well. We have brought the rule making instinct to a high peak of development. Today's Times describes physicians in the Netherlands who have developed guidelines for ending the lives of babies whose birth defects doom them to

"what is certain to be a brief life of grievous suffering....
The doctors, Eduard Verhagen and Pieter J. J. Sauer of the University Medical Center in Groningen, in an essay in today's New England Journal of Medicine, said they had developed guidelines, known as the Groningen protocol. The guidelines have been described in some news reports over the last several weeks, and the authors said they wrote their essay to address 'blood-chilling accounts and misunderstandings.'"

As a bureaucrat, I might be expected to welcome this. There's nothing like a well-designed rule to warm the cockles of one's heart (ed. --but bureaucrats don't have hearts). In this case I'm not sure. The assisted suicide law in Oregon seems to have worked okay, so is there anything wrong in principle with this effort? I'm reluctant to go along with it, but not sure whether it's the "yuck factor"--the desire to avoid contemplatin truly unpleasant circumstances--or wisdom.

My crack at wisdom would say something like--in these circumstances, you can't win. Some babies will be killed and be saved great pain. Some will be killed who might have survived through the pain and had a life. And sometimes the rule will be misapplied. It's not clear that having the rule will improve the results.

I don't know. Tomorrow I'll think something different.

Bernie Ebbers and the Know-It-All Executive

The case of Bernie Ebbers, former head of Worldcom, is now in the hands of the jury. The prosecution painted him as a detail person, who obsessed over the expenses for coffee service at headquarters. The main prosecution witness, Mr. Sullivan, the chief financial officer, said he discussed the accounting frauds with Ebbers and got his approval. The defense painted Ebbers as a good salesman, who didn't know technology (although he bought up a key piece of the Internet in UUNet) and didn't know accounting--just a good old phys ed coach.

Though I love to believe the worst of CEO's (part of my agri-populist background showing), I found the picture of this CEO a bit disconcerting--it reminded me so much of one of my past bosses, the one I think of as the dark prince. DP was a mix of insecurities and strengths. He loved to show his knowledge and he knew more than I liked to believe. But he didn't like to show any ignorance and he was expert at hiding it. He'd do a good show and tell for outsiders and usually try to skate his way past potholes in staff meetings. Dilbert partially describes him, but Dilbert's boss is too clueless too often. One of DP's ways of asserting his knowledge, and his power, was to focus on trivia (to me), on the details of correspondence, on the costs of minor expenditures. So without knowing the men, or hearing the testimony, I can believe Ebbers or I can believe Sullivan.

I can even believe them both--the slick numbers man not admitting openly that he's violating the law, or doing anything differently than his peers would do; the salesman who cons everyone and ends up agreeing to fraud, both in the service of the almighty dollar.

Bottom line--throw them both in jail--look at the great things jail has done for Martha. Maybe we should throw all CEO's in jail when they reach 60, just on general principle. A sort of blanket indulgence for all the sins we know they must have committed by being CEO.

An End to Days of High Cotton? (washingtonpost.com)

One of the joys of being an American studies major working as a bureaucrat in a national organization is running into tidbits that make history live. It' s natural to think that the melting pot and time have made Americans uniform, but not so. As here, in an article on Bush's proposed changes to the farm program.

An End to Days of High Cotton? (washingtonpost.com): "Despite the limits, for example, Colorado River Indian Tribes Farm of Parker, Ariz., collected $2.4 million in payments in 2003 related mainly to cotton production, and Perthshire Farms, a huge Mississippi cotton operation, took in $2.1 million, according to the Environmental Working Group, an advocacy organization that publishes and analyzes USDA data."

My guess is that the first operation is an Indian tribal venture, which, if memory serves (current rules may differ), were treated almost as if exempt from payment limitation. Remember that, except when forced by the government, Indians "owned" land in common, not as separate parcels. So modern Indian farmers might well want to farm together in a tribal venture using their commonly owned land. Assume there were 50 farmers in the venture and the limitation was $100,000 (for ease of calculation). Each, if farming individually, could receive up to $100K in payments (if otherwise earned). Because the 50 are farming together as a venture, we treated the venture as if it had a limitation of $5 million (50 x $100K) .

The Mississippi operation may be a "Mississippi Christmas tree"--that is an operation carefully constructed by lawyers to evade the limitation rules. The NY Times did a series on them in 1990 or so, but they've had the political clout (think Sen. Lott) to keep the rules from being changed.

The Ninth Annual Slate 60 - America's most generous philanthropists, and where they gave. By Jodie T. Allen

Slate, urged by Ted Turner, has compiled the 60 most generous philanthropists for the last nine years here:

"Alma maters and other institutions of higher learning remain the most popular outlet for munificence (56 colleges and universities make the 2004 list) followed by private foundations (25) and hospitals and medical centers (18). Museums, libraries, and other groups dedicated to the arts are also popular."

Zathras, as usual, is interesting (see the excerpt from the Fray below the article). Most of the following was posted there as a belated comment.

I suspect one factor is simply the structure of philanthropy. Having given (very modestly) to my alma mater and the Kennedy Center, I'm very aware of the fact that such institutions have a regular ladder of contribution levels. So someone who is competitive and has done well at competing has fund raisers beating at him or her to increase one's giving to the next level. And a reward for such giving is visibility--appearing on donor lists. Presumably most donors read the lists to see that they were recognized, and to see if they recognize other givers. One gets prestige by giving. And universities and such have a pre-existing community to solicit.

Mine is a circular argument--universities etc. get money by providing status and prestige to the givers. The better the university the more prestige derived by giving to it.

Helping the poor has little status, provides little prestige (except perhaps for saints like Mother Theresa, who may be highly regarded simply because they can't be a realistic role model for anyone), and there is no pre-existing community to solicit. People aren't automatically generous--the tsunami and 9/11 shows they'll respond to an event, but ongoing causes don't get money from heaven, they have to work at it. The high prestige cultural institutions have a big advantage there.

I might note that Dante needed the seven circles of hell to adequately distinguish degrees of evil. The Kennedy Center has eight circles distinguishing the different levels of giving. (Not that giving to the Kennedy Center is at all related to hell.)

The Golden Rule and the Founding Fathers

The New York Times > Week in Review > Putting God Back Into American History:

David Fitzpatrick has an interesting summary of arguments over how religious and Christian the Founding Fathers were, focussing on:

"Mr. Barton, who is also the vice chairman of the Texas Republican Party, is a point man in a growing movement to call attention to the open Christianity of America's great leaders and founding documents. The goal is to reverse what many evangelical Christians claim is a secularist revision of history, to defend displays of religion in public life and to make room for God in public school classrooms."

I'm comfortable that they were (mostly, coolly) religious, but it blurs the picture to focus on Washington, Jefferson, Franklin et. al. The best estimates are that the Revolutionary generation was mostly unchurched, with church membership in the 15-25 percent range. See a very interesting book called "The Churching of America" by Roger Finke and Rodney Stark. They say church membership/religious participation grew over the years, reaching a high in the 1960's with reasonable stability since. The reason for the "churching", compared to other developed countries, is the free market competition for members by the various American sects/denominations.

It's also true, IMHO, that we are today a more truly Christian nation in our practices than in 1776. We come closer to practicing the Golden Rule, than at any time in the past. Apply the John Rawls test--forgetting about standard of living, would you prefer to have been born in a time of slavery, patriarchy, etc. or now? I rest my case.

Reducing Farmer's Risk-- Community Supported Agriculture (CSA)

A reference in today's paper about making contracts with CSA farms sent me looking for this from USDA : Community Supported Agriculture (CSA):

"In basic terms, CSA consists of a community of individuals who pledge support to a farm operation so that the farmland becomes, either legally or spiritually, the community's farm, with the growers and consumers providing mutual support and sharing the risks and benefits of food production. Typically, members or 'share-holders' of the farm or garden pledge in advance to cover the anticipated costs of the farm operation and farmer's salary. In return, they receive shares in the farm's bounty throughout the growing season, as well as satisfaction gained from reconnecting to the land and participating directly in food production. Members also share in the risks of farming, including poor harvests due to unfavorable weather or pests."

Note the last sentence--CSA is another way for farmers to move risk elsewhere. (See my previous post on other structures. CSA also fits into the general boomer pattern of increased diversification and choice, instead of just plain blue jeans, we've all sorts of shades in all sorts of fits to choose from. Instead of plain old coffee, we go to Starbucks and get bewildered by the choice.

Dissing Politicians

Inside Washington, a political talk show (indeed, the descendant of the original talk show run by Martin Agronsky back before cable) last weekend included an exchange on the political life. Can't find a transcript (it runs on ABC's WJLA in D.C., run by Gordon Peterson now, with Charles Krauthammer, Nina Totenburg, Colby King, and possibly John Harwood the regulars (there's been turnover, Evan Thomas and Jack Germond used to be on with CK and NT).

The gist was amazement that anyone would actually want to go into politics, as mean and adversarial as it is now. The sentiment is distressing, even though the situation is realistically described.